Post Office Loan - Early Repayment

Teadog

Hi all,

I'm looking for some advise on a personal loan I took out with the Post Office recently and any info would be much appreciated.

I signed my agreement late last month for a loan of £4000 over 24 months, at a rate of 22.4%.

After much consideration and a change in personal circumstances, I decided I no longer want the loan. I gave them a call to request an early settlement figure. I was aware I might have to pay interest for the amount of time I had the loan, (roughly 20 days) but the amount they told me was more than expected... £4168 to be exact. When I queried this, they mentioned that they charge interest up to 58 days. I have calculated this myself and I work out that I should only pay them around £64.00. Am I missing something here? Upon further questioning they told me the interest was front loaded, but I don't fully understand how that would work in my situation.

I now have to wait several weeks for the interest breakdown to be sent out to me, which in itself is a shambles.

Many thanks in advance
Teadog

[Deleted User]

The figure looks right. Two months interest will be in the region of £140, plus the 20 das interest you've had the loan.

Interest is never front loaded.

The sooner you clear it, the less you will pay.

Teadog

Thanks for the reply, I'm just wondering how you got to that amount?

I could be working this out completely wrong, but the total amount of the loan including interest would be £4904 to pay over 24 months. If I take the £904 and divide it by 730 days (24 months) that gives me £1.24 as a daily interest rate. If I then multiply this by the 58 days they mentioned that would bring me to roughly £72.00.

Again, apologies if this is a completely incorrect way of calculating this.

[Deleted User]

Interest isn't evenly spread over the term as it's charged on the outstanding balance.

You owe 4k at the start, at a monthly APR of just under 2%.

DREKLY

hmmm, thats a stagggering interest rate...
I have just obtained a larger loan from Nationwide, over 4years, at 3% fixed,
I suggest you look elsewhere !
good luck.

Gerynica

My personal experience with Post Office Loans has been very poor. In December 2018 I took £17500 on 11.9/% fixed with monthly payment of £383.08 for 5 years. Nine months later I wanted to settle the loan and the outstanding balance was shocking £15753.36. Meaning that from the £3447.72 I paid in the last 9 months only half (£1746.64) went towards the loan and the other half (£1701.08) went on interest 😱 I was absolutely shocked. I asked them to send me a breakdown of my payments including how the interest was charged but they only send me a statement of my money payments, which I can anyway see on my online banking. They failed to provide me with detailed breakdown of how my monthly interest was deducted. Very, very bad service etc. I will never touch them again. Years ago I had a loan with my bank and I could see every month how much interest I pay. For example, my monthly payment was £190 and every month £30 were deducted for the interest and the remaining money were going towards the loan. My interest was evenly divided, but even if it wasn’t I would have been able to pick it up straightaway as I can see what was happening through my online banking. With Post Office I was in the dark.
Basically my advice is, once you get the money from whatever lender just make sure you know what you are getting into and where your money go. I’ve learned my lesson so in future will always stick with my bank if I need a loan.

boo_star

Gerynica wrote: »

My personal experience with Post Office Loans has been very poor. In December 2018 I took £17500 on 11.9/% fixed with monthly payment of £383.08 for 5 years. Nine months later I wanted to settle the loan and the outstanding balance was shocking £15753.36. Meaning that from the £3447.72 I paid in the last 9 months only half (£1746.64) went towards the loan and the other half (£1701.08) went on interest 😱 I was absolutely shocked. I asked them to send me a breakdown of my payments including how the interest was charged but they only send me a statement of my money payments, which I can anyway see on my online banking. They failed to provide me with detailed breakdown of how my monthly interest was deducted. Very, very bad service etc. I will never touch them again. Years ago I had a loan with my bank and I could see every month how much interest I pay. For example, my monthly payment was £190 and every month £30 were deducted for the interest and the remaining money were going towards the loan. My interest was evenly divided, but even if it wasn’t I would have been able to pick it up straightaway as I can see what was happening through my online banking. With Post Office I was in the dark.
Basically my advice is, once you get the money from whatever lender just make sure you know what you are getting into and where your money go. I’ve learned my lesson so in future will always stick with my bank if I need a loan.

Your bank will do it the same way. There's nothing "shocking" about how the Post Office (which by the way is just an affinity brand of the Bank of Ireland) do business.

DrEskimo

Gerynica wrote: »

My personal experience with Post Office Loans has been very poor. In December 2018 I took £17500 on 11.9/% fixed with monthly payment of £383.08 for 5 years. Nine months later I wanted to settle the loan and the outstanding balance was shocking £15753.36. Meaning that from the £3447.72 I paid in the last 9 months only half (£1746.64) went towards the loan and the other half (£1701.08) went on interest 😱 I was absolutely shocked. I asked them to send me a breakdown of my payments including how the interest was charged but they only send me a statement of my money payments, which I can anyway see on my online banking. They failed to provide me with detailed breakdown of how my monthly interest was deducted. Very, very bad service etc. I will never touch them again. Years ago I had a loan with my bank and I could see every month how much interest I pay. For example, my monthly payment was £190 and every month £30 were deducted for the interest and the remaining money were going towards the loan. My interest was evenly divided, but even if it wasn’t I would have been able to pick it up straightaway as I can see what was happening through my online banking. With Post Office I was in the dark.
Basically my advice is, once you get the money from whatever lender just make sure you know what you are getting into and where your money go. I’ve learned my lesson so in future will always stick with my bank if I need a loan.

11.9% won't be the fixed rate, it will be the APR. They are quite different and it's worth knowing the difference. 11.9% fixed would have cost you a hell of a lot more!

You can just use finance calculators like this one to get a breakdown, but as said, there is nothing untoward about the interest you were charged by Post Office.

You can see rough figures using this site:

https://www.themoneycalculator.com/loans/calculators/loan-overpayment-calculator/#!/dealfinder/loans/

DCFC79

Gerynica wrote: »

My personal experience with Post Office Loans has been very poor. In December 2018 I took £17500 on 11.9/% fixed with monthly payment of £383.08 for 5 years. Nine months later I wanted to settle the loan and the outstanding balance was shocking £15753.36. Meaning that from the £3447.72 I paid in the last 9 months only half (£1746.64) went towards the loan and the other half (£1701.08) went on interest �� I was absolutely shocked. I asked them to send me a breakdown of my payments including how the interest was charged but they only send me a statement of my money payments, which I can anyway see on my online banking. They failed to provide me with detailed breakdown of how my monthly interest was deducted. Very, very bad service etc. I will never touch them again. Years ago I had a loan with my bank and I could see every month how much interest I pay. For example, my monthly payment was £190 and every month £30 were deducted for the interest and the remaining money were going towards the loan. My interest was evenly divided, but even if it wasn’t I would have been able to pick it up straightaway as I can see what was happening through my online banking. With Post Office I was in the dark.
Basically my advice is, once you get the money from whatever lender just make sure you know what you are getting into and where your money go. I’ve learned my lesson so in future will always stick with my bank if I need a loan.

Its absolutely shocking isn't it ?

Nearlyold

I never understand why people expect the interest to be evenly spread through the term of a loan, it's an absurd expectation.

[Deleted User]

DrEskimo wrote: »

11.9% won't be the fixed rate, it will be the APR. They are quite different and it's worth knowing the difference. 11.9% fixed would have cost you a hell of a lot more!

You can just use finance calculators like this one to get a breakdown, but as said, there is nothing untoward about the interest you were charged by Post Office.

You can see rough figures using this site:

https://www.themoneycalculator.com/loans/calculators/loan-overpayment-calculator/#!/dealfinder/loans/

DCFC79 wrote: »

Its absolutely shocking isn't it ?

boo_star wrote: »

Your bank will do it the same way. There's nothing "shocking" about how the Post Office (which by the way is just an affinity brand of the Bank of Ireland) do business.

Posters keep saying "its not shocking or absurd, thats how interest works.."

Yet when you use the Post Office loan calculator where they offer 3.2% fixed rate for a 10,000 loan over 3 years, they say you will only pay back this amount:

£10,493.69

Meaning I'd only end up paying the post office 493.69 for having loaned me 10,000 over three years???

So which is it?